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Low- and Middle-income Families, Urban Communities to Gain from $725 Million Fannie Mae, Enterprise Partnership
Low- and Middle-income Families, Urban Communities to Gain from $725 Million Fannie Mae, Enterprise Partnership
Published 02-07-01
Submitted by Fannie Mae
Tens of thousands of low- to middle-income American families will benefit from a five-year, $725 million commitment to affordable housing and community development announced today by Fannie Mae and The Enterprise Foundation. The financing will support community development through multifamily housing and economic development building on the new opportunities created by the recently enacted Community Renewal Tax Relief Act of 2000.
"The Enterprise Foundation has a long and successful history with Fannie Mae," said Enterprise Chairman and CEO Bart Harvey at the Feb. 7 announcement in Washington, DC. "The giant step Fannie Mae is taking today represents the next stage of that partnership, which will greatly expand our investment in communities, provide decent, affordable housing and create healthy and thriving families and neighborhoods."
"The Enterprise Foundation understands that the challenges facing communities across the country vary from place to place and that community-based organizations like those in the Enterprise network are uniquely suited to meeting them," said Franklin Raines, Fannie Mae's Chairman and Chief Executive Officer. "The plans we are announcing today are going to help provide solutions in many areas and will build upon and expand the business we’ve done together since 1987," Raines said. Fannie Mae is the nation's largest source of financing for home mortgages.
The Enterprise Foundation and Fannie Mae will focus on the need for housing and community development investment in several key areas:
Making investments in affordable rental housing development, construction and rehabilitation;
Returning foreclosed HUD properties to qualified low-income buyers;
Supporting revitalization and growth by financing housing, neighborhood retail and mixed-use development in distressed neighborhoods;
Investing in smart growth initiatives.
Fannie Mae will join with Enterprise to support neighborhood revitalization initiated by for-profit companies and nonprofit community development organizations during the next five years.
Affordable Multifamily Housing
Fannie Mae intends to provide equity of up to $500 million for investment in multifamily projects that qualify for the Low Income Housing Tax Credit under Section 42 of the Internal Revenue Code. The equity will be managed by The Enterprise Social Investment Corporation (ESIC), a for-profit subsidiary of The Enterprise Foundation that works with developers to acquire, finance and develop affordable housing and other community development initiatives in underserved neighborhoods. ESIC has raised more than $3.2 billion from investors to help produce 70,000 apartments and houses nationwide. Fannie Mae was one of ESIC’s first investors and has provided more than $530 million in equity through ESIC since 1987.
Through an arrangement with Fannie Mae, Enterprise Mortgage Investments (EMI) may originate up to $150 million in permanent mortgage loans on affordable multifamily housing projects for sale to Fannie Mae. EMI, a member of the Enterprise family, finances homes to rent to low-income families and individuals.
Regional and Local Community Development Initiatives
Fannie Mae will work closely with the Enterprise Foundation to identify and support community development initiatives and projects aimed at revitalizing underserved neighborhoods. Through its American Communities Fund,SM Fannie Mae will invest up to $75 million in debt and equity financing over a five-year period. Acting as a catalyst for neighborhood transformation, these project-based investments will provide quality affordable single-family and multifamily housing as well as mixed use and neighborhood retail developments.
Among the initiatives Fannie Mae and Enterprise will explore are investments supporting "smart growth" and the acquisition and rehabilitation of foreclosed properties from the U.S. Department of Housing and Urban Development (HUD).
Enterprise and Fannie Mae are also evaluating the implementation of The Community Renewal Tax Relief Act to determine potential investment opportunities. The legislation’s New Markets Tax Credit is expected to provide tax benefits to organizations investing in new and existing business, retail centers and other developments in low-income neighborhoods. This incentive offers a promising new tool for revitalizing underserved neighborhoods.
